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Suit Happens

by Ann Steffora

Electronic Business, Vol 23, No. 12
Copyright 1997 Electronic Business

So, your company has been sued. You'll go through a range of emotions--denial, anger, fear, bargaining and acceptance--but the only way to get through the experience with your sanity, revenue and corporate reputation intact is to take a rational approach.

The first thing to do when a litigation crisis hits your company is to set up a crisis team, according to John Toothman, founder and president of The Devil's Advocate, an Alexandria, VA-based strategic litigation consulting firm. The firm held a seminar in Santa Clara in late October called "Don t Bet Your Company on Litigation."


A litigation crisis occurs when the lawsuit has the potential to cripple the company, jeopardize critical products, trade secrets, supplies, capital or credit, and current or future talent, according to Toothman. Because legal battles are fought in the press, he says, an important part of your crisis team should be the public relations people. Companies must have a message that is clear enough to keep customers, but not to burn any bridges, Toothman continues. By being prepared with a plan for handling the crisis, he continues, a company can avoid saying no comment," which is perceived as ignorance, acknowledgment of the charges or simply not being prepared. Microsoft Corp. was clearly ready for the Justice Department's claim in October that the Redmond, WA, company had violated a 1995 consent decree by requiring computer makers that license Windows 95 to also distribute Microsoft's browser. Microsoft had its bases covered, using several different media messages to address several audiences, says Toothman.

Microsoft's first message, aimed squarely at reassuring the general public, was that the Microsoft practice benefits consumers because they get Explorer for "free." The second message, expounded by Microsoft's general counsel, was an official denial of the government's allegations and an expression of confidence that Microsoft would be vindicated in court. "This is the message for the legal world, the typical lawyer's message. [There was] nothing inspired here. This alone would have been insufficient," Toothman notes. A third message was from the chief operating officer for the industry community.

In addition to a PR person, the crisis team should include a lawyer, a decision maker within the company to set strategy (a member of management) and a legal liaison for daily tactical control and a buffer to the lawyer, Toothman says.

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